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One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

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Re: One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

#71

Post by lordnacho »

aresant wrote: post #4

Hard to beat the hedge fund compensation model of fee on the way up, fee on the way down. Agnostic to his Herbalife bet, Ackman "has widely underperformed the S&P 500 since its EOY 2012 inception: 7.1% since inception net of fees vs. 84% for the S&P 500. Their original flagship fund's (2004 inception) track record is outstanding with returns of ~20% per annum." So his first fund killed it, he made a name for himself,…

> Agnostic to his Herbalife bet, Ackman "has widely underperformed the S&P 500 since its EOY 2012 inception: 7.1% since inception net of fees vs. 84% for the S&P 500. Their original flagship fund's (2004 inception) track record is outstanding with returns of ~20% per annum."

But why should the S&P 500 be the benchmark for what Ackman does? If he was advertising that he's betting on broad market risk it would make sense, but he's not. He's long/short high concentration, which you could argue he's also not done fantastic at, but with a small number of positions you'd expect a wide potential spread of returns.

Re: One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

#72

Post by rwmj »

Overtonwindow wrote: post #31

I use to work in legislative affairs for the natural health industry. It's all one big scam. I try to explain it like this: Company A sells natural remedies, etc. Company B is a news organization which reports on natural health remedies, and also advertises for those companies, et. Nonprofit C is a consumer watchdog organization that investigates and promotes natural health. They are supported by the natural health i…

I used to consult for a couple of mortgage brokers back in the go-go 2000s before the crash, and it wasn't too different. Companies A, B and C arrange mortgages. Company D is a trade organization closely associated with A, B and C which awards annual prizes for "excellence" in the mortgage broking industry. By strange coincidence companies A, B and C are awarded the prizes every year (usually with slightly different names each year, or rotated from last years winners).

Re: One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

#73

Post by eej71 »

troisx wrote: post #48
eej71 wrote: post #24

Earlier quoted context omitted.

It's unfortunate that you are being downvoted - especially since you are citing John Hempton's excellent work on the topic. It's really worth a read and an interesting counterpoint to Ackman's analysis.

He's being downvoted because the work is not excellent. Hempton uses Mormon end-of-the-world hoarding as the legitimate excuse for inventory loading.

We must have read it entirely differently.

The second link, which is far briefer, highlights that Hempton has finally found an example of inventory loading by millennial members of the Mormon church. But he regards that as an edge case. So I don't read that as making the point that you seem to be criticizing.

More important though is the first link which is extensive and addresses many of Ackman's claims and includes Hempton's own front line documentation. None of that has to do with defending Herbalife on the grounds of "Mormon end of the world hoarding".

Re: One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

#74

Post by freshhawk »

addisonj wrote: post #40

I live and work in Utah, which, for not completely clear to me reasons, is home to a lot of MLMs. Nu Skin, Usana, Xango, doTerra, Young Living, Jamberry (and those are the ones I can just name off the top of my head) are all headquartered here. For an area that in many ways is punching above its weight class in terms of tech companies, I occasionally have nagging (possibly unfounded?) concerns in the back of my head…

To really make the case they aren't evil you have to pretend that those running these businesses are unaware of their own business plan and buy into their own marketing, while they carefully craft the marketing and contracts to break the law only so much as to remain profitable while paying settlements and fines.

It's a ridiculous idea. No one accidentally tunes a dark pattern so perfectly.

Re: One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

#75

Post by jjeaff »

swimfar wrote: post #46
addisonj wrote: post #40

I live and work in Utah, which, for not completely clear to me reasons, is home to a lot of MLMs. Nu Skin, Usana, Xango, doTerra, Young Living, Jamberry (and those are the ones I can just name off the top of my head) are all headquartered here. For an area that in many ways is punching above its weight class in terms of tech companies, I occasionally have nagging (possibly unfounded?) concerns in the back of my head…

The reason I had heard is because Mormon's make great door-to-door salesmen. Many of the men have spent a year or two of door-to-door proselyting (attempting to convert). So they're used to selling to strangers and also being rejected. I'm not sure how true this is, but it seems plausible.

Nah, they aren't driving the mlm. Their skills are leveraged more for the door to door giants like Vivent and most every other door to door sales company you can think of. And on the darker side, Utah also houses a great deal of very legally dubious boiler room sales floors. You will find that almost every single "I make $900 at home" that originated from the US will lead you to a high pressure sales floor in Utah.

The mlm seems to be the stay at home moms and maybe a mix of others that are able to leverage their church network.

Re: One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

#76

Post by jacobush »

jansan wrote: post #62
swimfar wrote: post #46

Earlier quoted context omitted.

The reason I had heard is because Mormon's make great door-to-door salesmen. Many of the men have spent a year or two of door-to-door proselyting (attempting to convert). So they're used to selling to strangers and also being rejected. I'm not sure how true this is, but it seems plausible.

I see a lot of those Mormon young men here in Germany on their mission. There are usually two of them, dresses well and behaving very politely. Although they directly contact people on the street, I never have the feeling that anyone is annoyed by them. Therefore I could well imagine that they are great sales men.

Anecdotally the same here in Sweden too. :-)

Re: One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

#77

Post by PeterisP »

lordnacho wrote: post #71
aresant wrote: post #4

Hard to beat the hedge fund compensation model of fee on the way up, fee on the way down. Agnostic to his Herbalife bet, Ackman "has widely underperformed the S&P 500 since its EOY 2012 inception: 7.1% since inception net of fees vs. 84% for the S&P 500. Their original flagship fund's (2004 inception) track record is outstanding with returns of ~20% per annum." So his first fund killed it, he made a name for himself,…

> Agnostic to his Herbalife bet, Ackman "has widely underperformed the S&P 500 since its EOY 2012 inception: 7.1% since inception net of fees vs. 84% for the S&P 500. Their original flagship fund's (2004 inception) track record is outstanding with returns of ~20% per annum." But why should the S&P 500 be the benchmark for what Ackman does? If he was advertising that he's betting on broad market risk it would make sen…

The "market average" like S&P is the expected return of passive investment - doing nothing, so that's why it's a reasonable benchmark. This (not 0%) is the straightforward default alternative investment, the one against you can measure an opportunity cost.

The point of hedge funds is that they can do better than that, but charge a fee. However, if you get worse results than doing nothing, then the fee seems unjustified.

Re: One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

#78

Post by richardkeller »

coaxial wrote: post #36
gnu8 wrote: post #33

Earlier quoted context omitted.

Seems like a sure thing to short the piss out of an enterprise like this and wage a comprehensive campaign of activism and consumer education against it. With rationality on your side, how could you lose?

> with rationality on your side, how could you lose? Look at south Africa, multi vitamins, and hiv/aids denialism. It's pretty fascinating, human toll aside.

South Africa is hardly the only country where multivitamins are common. If rationality were the only metric for decision making, I would expect homeopathy to be far less common globally than it is today.

As for Aids denialism, South Africa suffers from a case of cultural antiestablishmentism, particularly in the context of Western medicine. Thankfully our government has stepped up in recent years, and actively promotes HIV/Aids education these days.

Re: One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

#79

Post by mschuster91 »

It's not just Herbalife. There are so many MLMs out there, it's madness. One former friend is a former friend because he fell victim to some German MLM, believe it was about a website where you could do conference calls.

Back when I was younger, I was a stagehand at a venue where a huge MLM, also named in the Fortune article, had thrown a yuuuge party. They rented two entire conference halls for thousands of people and had a giant stage for a musical set up, complete with pyrotechnics and everything.

Utter madness, all financed by poor people who were screwed over by their relatives or close friends...

Re: One Billion Dollars Short, Bill Ackman, and the Siege Of Herbalife (2015)

#80

Post by anotherbrownguy »

zzleeper wrote: post #37

I've got the feeling this thread is full of people that drank the BS koolaid of herbalife. They either sell snake oil products, or protein shakes that are 10x cheaper at Costco. I've known people desperate enough to start selling that crap (as well as others-their friends-that have to buy it just due to friendship), so please stop spreading MLM scams.

>I've known people desperate enough to start selling that crap (as well as others-their friends-that have to buy it just due to friendship), so please stop spreading MLM scams.

They offer 100% buyback for distributors for unopened products and they stopped lead generation completely 4 years ago. So, their distributors are no different from what cell phone carriers are to Apple.

>They either sell snake oil products, or protein shakes that are 10x cheaper at Costco.

Kinda like Apple then?

>I've got the feeling this thread is full of people that drank the BS koolaid of herbalife.

Or the other way around?

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